Thailand Monetary Policy

Thailand: Central Bank leaves interest rates unchanged

October 20, 2010

At its 20 October monetary policy meeting, the Bank of Thailand (BoT) decided to leave the one-day repurchase rate unchanged at 1.75% in a decision widely expected by the market. The decision follows on two straights 25 basis-points' increases in July and August. Monetary authorities argued that the recovery in the world economy continues, albeit at a slower pace, with large economies - such as the U.S. and Japan - still remaining ?fragile? due to risks stemming from high unemployment and faltering domestic demand. In addition, European economies continue to face the challenge of tightening budgets in the year ahead, which will adversely affect Thai exports amid lower external demand. BoT Assistant Governor Paiboon Kittisrikangwan added that the economy is expected to grow mainly as a result of strong domestic demand but inflationary pressures are expected to remain at bay. The next monetary policy meeting is scheduled for 1 December.

Thailand’s external sector recorded a USD 280 million deficit in December, significantly below the USD 1 billion surplus registered in the same month of the previous year and markedly below the USD 1.8 billion surplus logged in November.